Correlation Between Mercedes Benz and Piaggio C
Can any of the company-specific risk be diversified away by investing in both Mercedes Benz and Piaggio C at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Mercedes Benz and Piaggio C into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercedes Benz Group AG and Piaggio C SpA, you can compare the effects of market volatilities on Mercedes Benz and Piaggio C and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Mercedes Benz with a short position of Piaggio C. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercedes Benz and Piaggio C.
Diversification Opportunities for Mercedes Benz and Piaggio C
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mercedes and Piaggio is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Mercedes Benz Group AG and Piaggio C SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piaggio C SpA and Mercedes Benz is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Mercedes Benz Group AG are associated (or correlated) with Piaggio C. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piaggio C SpA has no effect on the direction of Mercedes Benz i.e., Mercedes Benz and Piaggio C go up and down completely randomly.
Pair Corralation between Mercedes Benz and Piaggio C
Assuming the 90 days horizon Mercedes Benz is expected to generate 3.63 times less return on investment than Piaggio C. But when comparing it to its historical volatility, Mercedes Benz Group AG is 2.28 times less risky than Piaggio C. It trades about 0.06 of its potential returns per unit of risk. Piaggio C SpA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 206.00 in Piaggio C SpA on October 21, 2024 and sell it today you would earn a total of 11.00 from holding Piaggio C SpA or generate 5.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercedes Benz Group AG vs. Piaggio C SpA
Performance |
| Timeline |
| Mercedes Benz Group |
| Piaggio C SpA |
Mercedes Benz and Piaggio C Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercedes Benz and Piaggio C
The main advantage of trading using opposite Mercedes Benz and Piaggio C positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercedes Benz position performs unexpectedly, Piaggio C can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Piaggio C will offset losses from the drop in Piaggio C's long position.| Mercedes Benz vs. Volkswagen AG Pref | Mercedes Benz vs. Porsche Automobile Holding | Mercedes Benz vs. Volkswagen AG | Mercedes Benz vs. Mercedes Benz Group AG |
| Piaggio C vs. Isuzu Motors | Piaggio C vs. Honda Motor Co | Piaggio C vs. Porsche Automobil Holding | Piaggio C vs. Mazda Motor Corp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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